Why Money-Saving Challenge DOESN’T Work (And What You Should Do Instead)

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If you are looking for money-saving challenges to help you save money, I recommend that you read on and see why money-saving challenges don’t work and what better alternatives that you should use to save money.

Before I go on to prove my point, let’s first go through some of the most popular money-saving challenges and understand how they work.

52-Week Money Saving Challenge

So, how does this 52-week money-saving challenge work? 

You start with a small amount from week 1 and then gradually increase the amount that you save each week until week 52.

For example, if you start with $1 on week 1 and increase to $2 on week 2 and $3 on week 3, you will have $1378 saved at the end of the 52-week money-saving challenge. 

I have attached the money-saving spreadsheets here, so you can download and play with the numbers to see how much you need to save every week to achieve your desired savings goal. 

For example, to save $5000 in 52 weeks, all you need is to start saving $70 on week 1.

Then, you gradually increase the amount you save by $1 every week until week 52. 

By week 52, you will have about $5000 saved.

Now, what if you don’t get paid every week?

If you only get paid every two weeks or once a month, there are modified versions of this money-saving challenge:

• Bi-Weekly Money Saving Challenge
• Monthly Money Saving Challenge

So, how does a “bi-weekly” saving challenge work?

Once every two weeks, you put aside a certain amount of money in your savings account.

And you do this 26 times because there are 52 weeks in a year.

What about a monthly money-saving challenge?

This works similarly, too. 

The only difference is that you set aside a certain amount of money to put in your savings once a month. 

There are 12 months in a year. 

So, you do it 12 times. 

By the way, you can keep the challenge very simple by just saving a fixed amount instead of gradually increasing it. 

For example, you can just save $20 every week for 52 weeks straight.

If you do that, you will have $1040 saved by the end of 52 weeks. 

Why These Money-Saving Challenges Don’t Work

But, here is the hard truth.

If your objective is to save money, a money-saving challenge ONLY works if you have the discipline to stick to it and complete the challenge. 

But, the reality is that too many people start the challenge all excited only to give up a few months later (or even earlier).

Here are some of the top reasons why people fail their money-saving challenge:

• They are living pay cheque to pay cheque and don’t have much money left to put into savings
• life and work get in the way and they don’t have the time to continue the challenge
• They have emergency expenses and derail their money-saving plan
• They have bad financial habits such as impulsive buying, so their money-saving challenge is doomed to fail from day one

Now, if you are serious about saving money, here’s a better alternative.

You can set up a new savings acct (or use your existing savings account) and then automate a weekly or monthly transfer from your checking account to your savings account.

So, every time you get your pay credited to your checking account, a portion of your income will be automatically transferred to your savings account for you WITHOUT you having to do anything. 

You can start with a fixed amount of, let’s say, $30. 

If you are getting paid every week, that means you will have $1560 saved (which is $30/week x 52 weeks) by the end of 52 weeks AUTOMATICALLY. 

It’s a set-and-forget savings plan. 

If you want to be aggressive with your savings plan, you can set up an automatic transfer of at least 20% of your pay to your savings account. 

Now, let’s look at other types of money-saving challenges.

$5 Money Saving Challenge

This challenge is very simple and random.

How it works is that you save every $5 bill that comes into your possession throughout the year. 

BUT, with cashless payment, this challenge is going to become obsolete very soon.

Spare Change Challenge

The challenge works by putting away all your spare change into a savings jar.

So, every time you make a purchase and are given spare change, you put it in your savings jar or piggy bank.

But, with cashless payment gaining popularity, I feel that this spare change challenge is going to become obsolete soon.

The good news is that there is a new alternative that might work for you.

There is this app called “Acorn” which lets you invest your spare change automatically every time you make a purchase with your card. 

For example, if you make a purchase for $10.30, what Acorn does is that it will automatically round up your purchase to $11 and invest the $0.70 for you. 

How do you get started?

Simply download the App and follow the instruction to set your account up. 

It is very simple and fast. (Only takes about 5 mins to set it up)

Once you are all set, Acorn will automatically invest your spare change and help you grow your money without you having to do anything.

Does it charge any fees?

Yes, there is a small flat fee of $1 every month for using the ” Acorn Invest” plan, which I think is very reasonable and affordable. 

No Spend Challenge 

This challenge is very simple as well. 

All it requires you to do is to restrict all your spending to necessities such as food, water, and utilities. 

That means no spending on things like new clothes, movies, or parties for the duration of your no-spend challenge. 

This is going to be hard if you are someone who is always buying things on impulse and lacks self-control over your spending. 

What Is The ONE Thing You Must Do If You Want To Save More Money

When it comes to savings, the most important thing you must do is eliminate all your bad financial habits. 

That’s the root cause why most of people don’t have any savings or fail to save.

It’s just like when you want to lose weight, you try all sorts of weight loss challenges. 

Let’s say you manage to complete the challenge and lose some weight, can you guarantee that you won’t regain all the lost weight?

No, if you don’t change your unhealthy eating and drinking habits.

So, it’s same with saving money.

Completing a money-saving challenge will let you see more savings in your bank account.

But, that will only be temporary if you never break all your bad financial habits.

Because soon or later, you are going to wipe out whatever you’ve saved in the challenge after impulsive buying or paying off your credit card debt.

Now, ask yourself. 

Do you always buy things that you like but you don’t necessarily need?

I used to be like that.

Many years ago, I made a lot of poor buying decisions. 

That’s why I ended up with a closet full of dresses that I have worn just a few times and shoes that I seldom wear.

In case you are wondering what I did with all these items, I listed them on PoshMark and sold them away. 

More importantly, I put all the money that I made from the sales into a high-yield savings account.

Now, I live a minimalist life. 

And here’s the best part of this change. 

Not only do I find that I can save much more money, but I also feel happier because I live simpler. 

So, how do you get started breaking your bad financial habits?

First, you need to realize what financial habits are not good. 

Here are some examples of bad financial habits:

• Impulsive buying 
• Keeping up with the Joneses
• Ignore budgeting
• Credit card debt

Now, you might be wondering how you can get rid of your bad habits because we all know the saying “Old habits die hard”.

It’s true that it takes quite some time to break an old habit and replace it with a new one, but it is possible.

First, let’s understand why we make bad money decisions even though we know better. 

Nobel Prize winner Daniel Kahneman who wrote the book “Thinking Fast and Slow,” said there are two ways our brains process the world around us:

• System 1, or “fast thinking,” is associated with snap decisions and subconscious thoughts. It operates automatically without voluntary control.
• System 2, or “slow thinking,” handles deeper, conscious analysis and is associated with agency, choice, and concentration.

So, when you are presented with a choice of spending $1500 on a branded handbag that you love or saving the amount of money for retirement,  “fast thinking” will gravitate towards instant gratification but “slow thinking” will steer you toward a better financial decision. 

Most of the time, it’s easier to let “fast thinking” get its way because all our decisions are driven by our desire to seek pleasure and avoid pain.

Getting rewarded with a branded handbag gives us pleasure while cutting our spending can make us feel uncomfortable.

Now, understanding why you make bad money decisions is just the first step. 

So, what can you do to change your behavior?

Research found that change happens when a person is motivated by positive emotions. 

Let’s look at the same example.

You have to choose either spending $1500 on a branded handbag or putting it in a high-yield savings account.

let’s say you make the wise decision of putting it in a savings account. You reward yourself with something reasonable like eating your favorite food.

The more you enforce the positive change in your behavior,  the more the change will stay and new habits will form.

Once you have gotten rid of your bad financial habit, you will see that your savings grow substantially without you doing any money-saving challenges whatsoever.